Outgoing Securities and Exchange Commission Commissioner Hester Peirce has said that regulators should rethink how they monitor the financial system, and to press for less personal data collection, not more.
In a speech Wednesday focusing on digital identity systems and decentralized networks, Peirce took aim at know-your-customer and anti-money-laundering rules.
U.S. regulators are now racing ahead with crypto rulemaking. Peirce, who earned the nickname “crypto mom” for her friendly approach to watchdogging the space, is set to leave the SEC in November.
“Today society is at a crossroads,” Peirce said at the SIFMA’s Digital Assets Conference in New York.
“Down one path lies the status quo: more data collection, more intermediary surveillance, more ‘know your customer’ requirements that turn our financial rails into a panopticon.”
“Down the other path lies an opportunity to use new technologies to improve our ability to catch criminals while collecting less personal information than ever before, and monitoring more sparingly to protect Americans’ privacy.”
Peirce argued that piling up ever more data on law-abiding customers to help find criminals doesn’t work. In her view, bigger “haystacks” make the needles harder to find, while every stored data point raises the risk of leaks or misuse.
She criticized a regulatory mindset fixated on “data go up,” comparing it to crypto enthusiasts’ obsession with rising prices.
Peirce pointed to cryptographic tools such as zero-knowledge proofs and attribute-based credentials, which can confirm facts like a person’s age, accredited-investor status, or absence from sanctions lists without revealing the underlying personal details.
She also urged the SEC to let firms rely on identity checks already performed by other regulated institutions, rather than making every firm collect and store the same sensitive information.
Under President Joe Biden, the SEC was tough on the crypto space, with its Biden-appointed former Chair Gary Gensler frequently suing major crypto companies for allegedly selling unregistered securities.
Peirce was appointed to lead the Crypto Task Force in 2025. The regulator has taken a far more friendly approach to watchdogging the space since Donald Trump became president again.
Now, regulators are saying they want to create clear rules for the fast-moving industry, despite landmark legislation, the Clarity Act, being blocked last week.
Despite Commissioner Peirce’s alias, she previously said she would not describe herself as an advocate of the industry, but rather a “freedom maximalist.”
